Sarbanes Oxley Act and Corporate Governance Term Paper

Pages: 4 (1089 words)  ·  Style: APA  ·  Bibliography Sources: 7  ·  File: .docx  ·  Topic: Business

Sarbanes-Oxley Act & Corporate Governance

The Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act of 2002, was enacted on July 30, 2002, as a response to a plethora of accounting scandals that had recently plagued corporate America.

Powerful companies such as Tyco International, Enron, Adelphia, and WorldCom had fraudulently adjusted financial records that ended up costing shareholders billions of dollars, when the truth came to light and their stock prices plummeted. Sarbanes-Oxley is one of the most comprehensive pieces of accounting reforms, since the days of Franklin D. Roosevelt (Bumiller, 2002; Wegman, 2007). The aims of this legislature was to prevent future fraudulent corporate finance reporting, by tightening Corporate Governance regulations (Grumet, 2007).

Sarbanes-Oxley Act & Corporate Governance

Introduction:

The Sarbanes-Oxley Act (the Act), also known as the Public Company Accounting Reform and Investor Protection Act of 2002, or simply SOX, was enacted on July 30, 2002, as a response to a plethora of accounting scandals that had recently plagued corporate America.

Get full Download Microsoft Word File access
for only $8.97.
Powerful companies such as Tyco International, Enron, Adelphia, and WorldCom had fraudulently adjusted financial records that ended up costing shareholders billions of dollars, when the truth came to light and their stock prices plummeted. Sarbanes-Oxley is one of the most comprehensive pieces of accounting reforms, since the days of Franklin D. Roosevelt (Bumiller, 2002; Wegman, 2007). The aims of this legislature was to prevent future fraudulent corporate finance reporting, by tightening corporate governance regulations (Grumet, 2007).

Sarbanes-Oxley Act & Corporate Governance:

Term Paper on Sarbanes Oxley Act and Corporate Governance Assignment

As far as legislation is concerned, Sarbanes-Oxley is still a fairly recent enactment. The Act was designed with a series of procedures to make certain that publicly traded companies implemented adequate financial controls, in hopes of avoiding future accounting scandals, such had been experienced with Enron, WorldCom, and the like, which had shaken investor confidence to the bone. In addition to the implementation of these controls, the Act also requires documentation and certification of these controls, to ensure accuracy. These requirements are strictly enforced with more severe punishment than in previous corporate history, including: personal liability, as well as criminal penalties possibly applied to corporate financial officers, according to Montana (2007).

It marks a notable change in accounting history, taking away the industry's ability to self-regulate, that it once enjoyed, instead placing regulation in the hands of the Public Company Accounting Oversight Board (Wegman, 2007). As a new piece of legislation, the intricacies are just now coming to light, as corporations fully implement the requirements.

Cost of Corporate Governance Due to SOX:

As in any revolutionary piece of legislation, there are those naysayers that look beyond the important overall goals of the Act and instead have focused on the less than attractive challenges specifics of implementation. One such issue is the cost of compliance, with the Act, which has been considerably higher than originally anticipated. In particular is the cost of compliance with Section 404.

Section 404 specifies the internal control systems now required for public companies, via the Act.

Section 404 "requires management at (...) companies to assess the effectiveness of their internal controls over financial reporting and issue their findings in a public report. The legislation also mandates that auditors attest to management's findings, perform an independent assessment of control reliability, and issue… [END OF PREVIEW] . . . READ MORE

Two Ordering Options:

?
Which Option Should I Choose?
1.  Buy full paper (4 pages)Download Microsoft Word File

Download the perfectly formatted MS Word file!

- or -

2.  Write a NEW paper for me!✍🏻

We'll follow your exact instructions!
Chat with the writer 24/7.

Sarbanes-Oxley Act of 2002 Was Intended Research Paper


Sarbanes-Oxley Act 2002 Term Paper


Sarbanes-Oxley Act of 2002 and Impacts Term Paper


Sarbanes-Oxley Act Prior to the Enactment Term Paper


Corporate Governance Research Proposal


View 200+ other related papers  >>

How to Cite "Sarbanes Oxley Act and Corporate Governance" Term Paper in a Bibliography:

APA Style

Sarbanes Oxley Act and Corporate Governance.  (2007, December 12).  Retrieved October 31, 2020, from https://www.essaytown.com/subjects/paper/sarbanes-oxley-act-corporate-governance/2724635

MLA Format

"Sarbanes Oxley Act and Corporate Governance."  12 December 2007.  Web.  31 October 2020. <https://www.essaytown.com/subjects/paper/sarbanes-oxley-act-corporate-governance/2724635>.

Chicago Style

"Sarbanes Oxley Act and Corporate Governance."  Essaytown.com.  December 12, 2007.  Accessed October 31, 2020.
https://www.essaytown.com/subjects/paper/sarbanes-oxley-act-corporate-governance/2724635.